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Luminex (LMNX) Q4 Earnings Miss, 2019 Guidance Lacks Luster

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Luminex Corporation (LMNX - Free Report) reported fourth-quarter 2018 earnings of 4 cents per share (EPS), which missed the Zacks Consensus Estimate by 66.7%. The bottom line also fell from the year-ago quarter’s 20 cents.

Notably, post the announcement, shares of the company plunged. Notably, 2019 revenues are estimated in the band of $337-$343 million. The midpoint of the latest guidance of $340 million is marginally below the Zacks Consensus Estimate of $340.8 million.

Over the past year, the Zacks Rank #4 (Sell) stock has rallied 32% compared with the industry’s 8.6% rise and the S&P 500 index’s 1.3% gain.

Revenues in Detail

Revenues came in at $81.1 million, surpassing the Zacks Consensus Estimate by 2.6%. On a year-over-year basis, the top line climbed 3.8%.

Total sample-to-answer franchise revenues grew 41% from the prior-year quarter. On a full-year basis, revenues grew 34%.

Molecular diagnostic revenues were $39 million, down 11% year over year and up 1% from 2017.

2018 at a Glance

On a full-year basis, revenues totaled $315.8 million, up 3% year over year. EPS in 2018 was 49 cents, down 27.9% from 2017.

Luminex reports in six segments — System Sales, Consumable Sales, Royalty Revenues, Assay Revenues, Service Revenues and Other.

For 2018, System sales were $40 million (12.7% of net revenues), Consumables were $50.1 million (15.9%), Royalty Revenues were $49.4 million (15.6%), Assay Revenues were $156.7 million (49.6%), Service Revenues were $12.2 million (3.9%) and Other revenues were $7.4 million (2.3%).

Luminex Corporation Price, Consensus and EPS Surprise

 

Luminex Corporation Price, Consensus and EPS Surprise | Luminex Corporation Quote

Segmental Analysis

System Sales

Revenues at this segment totaled $10.2 million, down 1.3% from the year-ago quarter.

Consumable Sales

This segment accounted for $15.7 million of revenues, up 56.7% year over year. Per management, the upside was driven by higher bulk purchases by some of Luminex’s partners.

Royalty Revenues

Royalty revenues summed $13.5 million, up 19.2% on a year-over-year basis.

Assay Revenues

This segment posted revenues worth $37 million, down 11.7% on a year-over-year basis.

Service Revenues

Revenues in the segment grossed $3.2 million, up 12.1% from the year-ago quarter.

Other

Other revenues came in at $1.6 million, down 14% from a year ago.

Business Details

Per management, this Texas-based company placed 60 sample-to-answer molecular systems under contract during the fourth quarter. Active sample-to-answer customers are nearing 600.

Sample-to-answer utilization per VERIGENE customer grew 10% to $109,000, while the same for ARIES rose 14% to $53,000 from the year-ago quarter level.

The company also shipped 268 multiplexing analyzers, comprising MAGPIX systems, LX systems and FLEXMAP 3D systems.

Margins

Gross profit in the reported quarter was $48.3 million, down 4% year over year. Gross margin was 59.6%, which contracted 480 basis points (bps).

Research and development expenses grossed $13.2 million, up 27% year over year. Selling, general and administrative expenses in the fourth quarter were $32 million, up 11.6% year over year. Operating expenses totaled $47.4 million, up 14.8% from the previous year number.

As a percentage of revenues, adjusted operating margin was 3.9%, down significantly from the year-ago margin of 14.4%.

Guidance

For the first quarter of 2019, the company expects revenues between $82 million and $84 million. The midpoint of the latest guidance of $83 million beats the Zacks Consensus Estimate of $80.4 million.

In Conclusion

Luminex exited the fourth quarter on a mixed note. The company continues to gain from its flagship ARIES and VERIGENE platforms that currently have a strong customer base. Consumables and Royalty revenues also improved significantly. Management is optimistic about the acquisition of the flow cytometry asset of MilliporeSigma. A solid guidance for the first quarter of 2019 raises optimism in the stock.

On the flip side, year-over-year decline in EPS is worrisome. The company’s assay and molecular diagnostic revenues also declined in the quarter. Contraction in gross and operating margins add to the woes.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that posted solid quarterly results are Varian Medical Systems (VAR - Free Report) , AngioDynamics (ANGO - Free Report) and CONMED Corporation (CNMD - Free Report) .

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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